Is A Self-Directed IRA Right For Me?
When doing your research on retirement options and what to do with your savings, you may have come across options for IRAs. One of them is a self-directed IRA. Finding the best option for yourself and your lifestyle can be challenging, but knowing whether or not a self-directed IRA is right for you can be a good start. Keep reading to learn more about self-directed IRAs, what an IRA custodian is, and whether or not it is the right move for you.
What Is A Self-Directed IRA?
According to Investopedia, a self-directed individual retirement account is a type of individual retirement account (IRA) that can hold a variety of alternative investments normally prohibited from regular IRAs. Although the account is administered by an IRA custodian or trustee, it’s directly managed by the account holder—the reason it’s called “self-directed.” Available as either a traditional IRA (to which you make tax-deductible contributions) or a Roth IRA (from which you take tax-free distributions), self-directed IRAs are best suited for savvy investors who already understand the alternative investments and who want to diversify in a tax-advantaged account.
How Does a Self-Directed IRA Work?
Simply stated, a self-directed IRA is right for you if you have other investments, such as a small business, and wish to have a more diversified portfolio. As a more experienced investor, you will have the ability and know-how to open and manage your own IRA and be able to understand all the risks involved.
Things you can invest in with a self-directed IRA include:
- Gold, silver and other precious metals
- LLC membership interest
- Mineral rights, oil and gas
- Promissory notes
- Real estate (except for real estate that you live in)
- Tax lien certificates
- Undeveloped or raw land
- Water rights
In order to open a self-directed IRA, you will first need to find an IRA custodian to facilitate your account. Priority Gold is proud to partner with Preferred Trust Company to provide custodial and administrative services for your IRA-owned precious metals investments. Preferred Trust Company is a licensed Retail Trust Company specializing in self-directed IRAs. The Preferred Trust team is dedicated to providing personalized service to each account owner and the staff is cross-trained and works as one unit to provide fast and efficient responses to all your investment needs.
Then, you will need to decide what investments you would like to make. One of the benefits of a self-directed IRA is the many different options you have to invest in.
What Are The Benefits and Disadvantages Of A Self-Directed IRA?
Advantages of self-directed IRAs are:
- Greater flexibility in the investments you’re able to hold in the account.
- Built-in tax breaks on the earnings from your investments.
- The opportunity to make investments that line up with your passions, knowledge or experience.
- The chance to diversify funds by keeping some money in a self-directed IRA and other funds in traditional investment accounts or other retirement accounts.
- The option of selecting investments that may have higher potential for appreciation.
While there are many advantages to having a self-directed IRA, there can also be some disadvantages. Depending on how knowledgeable you are with investing, some of these might not even be an issue. However, it is important to know what they are so that you can weigh your options.
Disadvantages of self-directed IRAs include:
- You can’t invest in collectibles, life insurance or real estate you live in.
- The investments tend to have higher risk.
- The account maintenance fees can be relatively high.
- The record keeping and tax reporting requirements are complex.
- The IRS prohibits various types of transactions.
- You’ll have to pay penalties or taxes if certain IRS guidelines aren’t followed.
About Priority Gold
Whether you believe a self-directed IRA is right for you or not, we can help you with your investing needs. As a partnered IRA custodian, we can help you with all the ins-and-outs of your self-directed IRA. If you find that a self-directed IRA isn’t for you, we can still help you find an option that is suitable for your situation. Priority Gold offers many ways to invest in gold and helping our clients along their financial journey.
We have a proven three-step process in which we:
- Detail the best course of action for your long- and short-term goals.
- Help you roll over your existing 401(k) or IRA to fund a new Precious Metals IRA account.
- Work with you to identify the precious metals options and confirm the purchase you decide best to meet your goals.
Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink. We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping streamline precious metals purchases at a fair price, selecting suitable precious metals portfolios, and meeting critical financial objectives.
We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. Priority Gold guarantees the highest customer service standards, which come with honesty, professional conduct, and the Ethical Code of Business.
For more information, visit us at prioritygold.com